8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2013

UNITED STATES CELLULAR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-9712	62-1147325
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
8410 West Bryn Mawr, Chicago, Illinois		60631
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (773) 399-8900

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01.  Other Events

As previously disclosed, on November 6, 2012, United States Cellular Corporation (“U.S. Cellular”) entered into a Purchase and Sale Agreement with subsidiaries of Sprint Nextel Corporation (“Sprint”).  The Purchase and Sale Agreement provides that U.S. Cellular will transfer customers and certain PCS license spectrum to Sprint in U.S. Cellular's Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $480 million in cash at closing, subject to pro-rations of certain assets and liabilities. The Purchase and Sale Agreement also contemplates certain other agreements, collectively with the Purchase and Sale Agreement referred to as the “Divestiture Transaction.”  The transaction was approved by the FCC in March 2013 and the closing is expected to occur in the second quarter of 2013.  This transaction was reported on a Form 8-K dated November 6, 2012, which is incorporated by reference herein.

Also, as previously disclosed, on April 3, 2013, U.S. Cellular entered into an agreement relating to the Partnerships (as defined below) with Cellco Partnership d/b/a Verizon Wireless (“Verizon Wireless”).  U.S. Cellular holds a 60.00% interest in St. Lawrence Seaway RSA Cellular Partnership (“NY1”) and a 57.14% interest in New York RSA 2 Cellular Partnership (“NY2” and, together with NY1, the “Partnerships”).  The remaining interests are held by Verizon Wireless.  The Partnerships are operated by Verizon Wireless under the Verizon Wireless brand.  Because U.S. Cellular owns a greater than 50% interest in each of these markets and based on U.S. Cellular’s rights under the Partnership Agreements, prior to April 3, 2013, U.S. Cellular consolidated the financial results of these markets in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  The agreement amends the Partnership Agreements in several ways, which provide Verizon Wireless with substantive participating rights that allow Verizon Wireless to make decisions that are in the ordinary course of business of the Partnerships and which are significant to directing and executing the activities of the business.   Accordingly, as required by GAAP, effective April 3, 2013, U.S. Cellular will deconsolidate the Partnerships and thereafter will report them as equity method investments in its consolidated financial statements (the “Deconsolidation”).

The purpose of this Form 8-K is to file unaudited pro forma financial information for U.S. Cellular as of and for the three months ended March 31, 2013 and for the year ended December 31, 2012 that gives effect to the Divestiture Transaction and the Deconsolidation.

U.S. Cellular previously filed a Form 8-K dated April 3, 2013 with pro forma financial information relating to the Deconsolidation as of and for the year ended December 31, 2012, which is incorporated by reference herein.  This Form 8-K updates that information and also adds the Divestiture Transaction to the pro forma financial information.

Item 9.01.  Financial Statements and Exhibits

(b)Pro Forma Financial Information

The unaudited pro forma financial information of U.S. Cellular as of and for the three months ended March 31, 2013 and for the year ended December 31, 2012 that give effect to the Divestiture Transaction and the Deconsolidation, as discussed above in item 8.01, are attached as Exhibit 99.2.

(d)       Exhibits: 

In accordance with the provisions of Item 601 of Regulation S-K, any Exhibits filed or furnished herewith are set forth on the Exhibit Index attached hereto.

Attached as Exhibit 99.3 is a safe harbor cautionary statement under the Private Securities Litigation Reform Act of 1995.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
United States Cellular Corporation
(Registrant)
Date:	May 3, 2013
By:	/s/ Steven T. Campbell
	Steven T. Campbell Executive Vice President – Finance, Chief Financial Officer and Treasurer

EXHIBIT INDEX
The following exhibits are filed or furnished herewith as noted below.
Exhibit No.	Description
2.1	Purchase and Sale Agreement dated as of November 6, 2012 by and between United States Cellular Corporation and Sprint Spectrum L.P. and SprintCom, Inc. is hereby  incorporated by reference from Exhibit 2.1 to U.S. Cellular’s Current Report on Form 8-K dated November 6, 2012.
99.1	Unaudited pro forma financial information of U.S. Cellular as of December 31, 2012 and for the year ended December 31, 2012 that gives effect to the Deconsolidation is hereby incorporated by reference from Exhibit 99.1 to U.S. Cellular's Current Report on Form 8-K dated April 3, 2013.
99.2	Unaudited pro forma financial information of U.S. Cellular as of and for the three months ended March 31, 2013 and for the year ended December 31, 2012 that gives effect to the Divestiture Transaction and the Deconsolidation.
99.3	Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement

EX-99.2

 

Exhibit 99.2

UNAUDITED PRO FORMA FINANCIAL INFORMATION

On November 6, 2012, United States Cellular Corporation (“U.S. Cellular”) entered into a Purchase and Sale Agreement with subsidiaries of Sprint Nextel Corporation (“Sprint”). The Purchase and Sale Agreement also contemplates certain other agreements, collectively with the Purchase and Sale Agreement referred to as the “Divestiture Transaction.”

The Purchase and Sale Agreement provides that U.S. Cellular will transfer to Sprint certain rights and assets (collectively, the “Subject Assets”), and Sprint will assume certain liabilities (“Subject Liabilities”), related to U.S. Cellular’s Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (the “Divestiture Markets”), in consideration for $480 million in cash at closing (“Purchase Price”), subject to pro-rations of certain assets and liabilities.  U.S. Cellular will retain all other assets (“Retained Assets”) and liabilities (“Retained Liabilities”) related to the Divestiture Markets.  U.S. Cellular is not transferring and will continue to operate and provide services in Peoria, Rockford and certain other areas in Illinois, and in Columbia, Joplin, Jefferson City and certain other areas in Missouri.

On April 3, 2013, U.S. Cellular entered into an agreement relating to the Partnerships (as defined below) with Cellco Partnership d/b/a Verizon Wireless (“Verizon Wireless”).  U.S. Cellular holds a 60.00% interest in St. Lawrence Seaway RSA Cellular Partnership (“NY1”) and a 57.14% interest in New York RSA 2 Cellular Partnership (“NY2” and, together with NY1, the “Partnerships”).  The remaining interests are held by Verizon Wireless.  The Partnerships are operated by Verizon Wireless under the Verizon Wireless brand.  Because U.S. Cellular owns a greater than 50% interest in each of these markets and based on U.S. Cellular’s rights under the Partnership Agreements, prior to April 3, 2013, U.S. Cellular consolidated the financial results of these markets in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  The agreement amends the Partnership Agreements in several ways, which provide Verizon Wireless with substantive participating rights that allow Verizon Wireless to make decisions that are in the ordinary course of business of the Partnerships and which are significant to directing and executing the activities of the business.   Accordingly, as required by GAAP, effective April 3, 2013, U.S. Cellular will deconsolidate the Partnerships and thereafter will report them as equity method investments in its consolidated financial statements (the “Deconsolidation”).

The unaudited pro forma financial information is based on financial statements prepared in accordance with GAAP.  In addition, the unaudited pro forma financial information is based upon available information and assumptions that U.S. Cellular considers to be reasonable, and have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission (“SEC”).

The unaudited pro forma financial information is based on various assumptions. The actual results reported by U.S. Cellular in periods following the Divestiture Transaction and the Deconsolidation may differ significantly from those reflected in this unaudited pro forma financial information.  As a result, the unaudited pro forma financial information does not purport to project the future financial condition and results of operations of the consolidated company. The pro forma assumptions and adjustments are described in the accompanying schedules.  Pro forma adjustments are shown in the “Divestiture Markets” and “NY1 & NY2” columns and are those that are directly attributable to the transaction, are factually supportable and, with respect to the unaudited pro forma Statement of Operations, are expected to have a continuing impact on the consolidated results. Pro forma adjustments do not include allocations of corporate costs, as those costs are not directly attributable to these transactions.

The unaudited pro forma financial information should be read together with U.S. Cellular’s audited consolidated financial statements and accompanying notes, as of and for the fiscal year ended December 31, 2012, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in U.S. Cellular’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which was filed with the SEC on February 26, 2013, and U.S. Cellular’s Quarterly report on Form 10-Q for the period ended March 31, 2013, which was filed with the SEC on May 3, 2013.

1

The unaudited pro forma Statement of Operations for the year ended December 31, 2012 and the three months ended March 31, 2013 give effect to the Divesture Transaction and the Deconsolidation as if those transactions had occurred effective January 1, 2012, the beginning of U.S. Cellular’s 2012 fiscal year.
United States Cellular Corporation Pro Forma Statement of Operations (Unaudited)
					Less:
Year Ended December 31, 2012			As Reported		Divestiture Markets (1)		NY1 & NY2 (2)		Pro Forma
(Dollars and shares in thousands, except per share amounts)
Operating revenues
	Service		$	4,098,856	$	420,342		157,807	$	3,520,707
	Equipment sales			353,228		35,797		11,164		306,267
		Total operating revenues		4,452,084		456,139		168,971		3,826,974
Operating expenses
	System operations (excluding Depreciation, amortization and   accretion reported below)			946,805		89,648		40,432		816,725
	Cost of equipment sold			935,947		92,955		23,683		819,309
	Selling, general and administrative (including charges from   affiliates of $104.3 million)			1,764,933		143,706		46,317		1,574,910
	Depreciation, amortization and accretion			608,633		104,060		10,262		494,311
	(Gain) loss on asset disposals and exchanges, net			18,088		9,210		-		8,878
	(Gain) loss on sale of business and other exit costs, net			21,022		24,445		-		(3,423)
		Total operating expenses		4,295,428		464,024		120,694		3,710,710
Operating income				156,656		(7,885)		48,277		116,264
Investment and other income (expense)
	Equity in earnings of unconsolidated entities			90,364		-		(28,407)		118,771
	Interest and dividend income			3,644		-		-		3,644
	Gain (loss) on investment			(3,718)		-		-		(3,718)
	Interest expense			(42,393)		(279)		-		(42,114)
	Other, net			500		-		90		410
		Total investment and other income (expense)		48,397		(279)		(28,317)		76,993
Income (loss) before income taxes				205,053		(8,164)		19,960		193,257
	Income tax expense (benefit) (3)			63,977		(3,088)		-		67,065
Net income				141,076		(5,076)		19,960		126,192
	Less: Net income attributable to noncontrolling interests, net of tax			(30,070)		-		(19,960)		(10,110)
Net income attributable to U.S. Cellular shareholders			$	111,006	$	(5,076)	$	-	$	116,082
Basic weighted average shares outstanding (4)				84,645		-		-		84,645
Basic earnings per share attributable to U.S. Cellular shareholders			$	1.31	$	-	$	-	$	1.37
Diluted weighted average shares outstanding (4)				85,067		-		-		85,067
Diluted earnings per share attributable to U.S. Cellular shareholders			$	1.30	$	-	$	-	$	1.36

2

United States Cellular Corporation Pro Forma Statement of Operations (Unaudited)
					Less:
Three Months Ended March 31, 2013			As Reported		Divestiture Markets (1)		NY1 & NY2 (2)		Pro Forma
(Dollars and shares in thousands, except per share amounts)
Operating revenues
	Service		$	996,349	$	95,244	$	40,816	$	860,289
	Equipment sales			85,397		4,643		2,486		78,268
		Total operating revenues		1,081,746		99,887		43,302		938,557
Operating expenses
	System operations (excluding Depreciation, amortization and   accretion reported below)			216,299		20,355		11,701		184,243
	Cost of equipment sold			241,691		9,230		5,446		227,015
	Selling, general and administrative (including charges from   affiliates of $23.5 million)			420,080		24,844		11,808		383,428
	Depreciation, amortization and accretion			189,845		55,969		2,735		131,141
	Loss on asset disposals, net			5,434		780		-		4,654
	(Gain) loss on sale of business and other exit costs, net			6,931		7,118		-		(187)
		Total operating expenses		1,080,280		118,296		31,690		930,294
Operating income				1,466		(18,409)		11,612		8,263
Investment and other income (expense)
	Equity in earnings of unconsolidated entities			26,835		-		(6,824)		33,659
	Interest and dividend income			903		-		-		903
	Interest expense			(10,910)		(80)		-		(10,830)
	Other, net			(215)		-		7		(222)
		Total investment and other income (expense)		16,613		(80)		(6,817)		23,510
Income (loss) before income taxes				18,079		(18,489)		4,795		31,773
	Income tax expense (benefit) (3)			7,369		(6,994)		-		14,363
Net income				10,710		(11,495)		4,795		17,410
	Less: Net income attributable to noncontrolling interests, net of tax			(5,796)		-		(4,795)		(1,001)
Net income attributable to U.S. Cellular shareholders			$	4,914	$	(11,495)	$	-	$	16,409
Basic weighted average shares outstanding (4)				83,838		-		-		83,838
Basic earnings per share attributable to U.S. Cellular shareholders			$	0.06	$	-	$	-	$	0.20
Diluted weighted average shares outstanding (4)				84,403		-		-		84,403
Diluted earnings per share attributable to U.S. Cellular shareholders			$	0.06	$	-	$	-	$	0.19

3

The unaudited pro forma balance sheet gives effect to the Divestiture Transaction and Deconsolidation as if those transactions had occurred effective March 31, 2013.
United States Cellular Corporation Pro Forma Balance Sheet — Assets (Unaudited)
					Less:
March 31, 2013			As Reported		Divestiture Markets (5)		NY1 & NY2 (6)		Pro Forma
(Dollars in thousands)
Current assets
	Cash and cash equivalents		$	419,696	$	(480,000)	$	-	$	899,696
	Short-term investments			110,585		-		-		110,585
	Accounts receivable
		Customers and agents		314,463		-		11,723		302,740
		Roaming		29,132		-		-		29,132
		Affiliated		44		-		-		44
		Other		51,062		-		23,910		27,152
	Inventory			139,136		-		-		139,136
	Income taxes receivable			2,776		-		-		2,776
	Prepaid expenses			64,365		-		25		64,340
	Net deferred income tax asset			36,302		-		-		36,302
	Other current assets			17,111		-		-		17,111
				1,184,672		(480,000)		35,658		1,629,014
Assets held for sale (7)				213,593		213,593		-		-
Investments
	Licenses			1,470,944		-		-		1,470,944
	Goodwill			421,743		-		33,714		388,029
	Customer lists, net of accumulated amortization of $96,843			68		-		-		68
	Investments in unconsolidated entities			165,529		-		(120,000)		285,529
	Long-term investments			40,142		-		-		40,142
				2,098,426		-		(86,286)		2,184,712
Property, plant and equipment
	In service and under construction			7,562,931		-		139,112		7,423,819
	Less: Accumulated depreciation			4,614,423		-		57,697		4,556,726
				2,948,508		-		81,415		2,867,093
Other assets and deferred charges				78,436		-		69		78,367
Total assets			$	6,523,635	$	(266,407)	$	30,856	$	6,759,186

4

United States Cellular Corporation Pro Forma Balance Sheet — Liabilities and Equity (Unaudited)
							Less:
March 31, 2013					As Reported		Divestiture Markets (5)		NY1 & NY2 (6)		Pro Forma
(Dollars and shares in thousands)
Current liabilities
	Current portion of long-term debt				$	93	$	-	$	-	$	93
	Accounts payable							-
		Affiliated				8,792		-		5,048		3,744
		Trade				281,762		-		5,073		276,689
	Customer deposits and deferred revenues					202,209		-		-		202,209
	Accrued taxes					43,357		(138,458)		-		181,815
	Accrued compensation					50,698		-		-		50,698
	Other current liabilities (7)					98,657		(18,360)		-		117,017
						685,568		(156,818)		10,121		832,265
Liabilities held for sale (7)						18,360		18,360		-		-
Deferred liabilities and credits
	Net deferred income tax liability					857,439		26,301		-		831,138
	Other deferred liabilities and credits					292,687		-		726		291,961
Long-term debt						878,975		-		-		878,975
Commitments and contingencies
Noncontrolling interests with redemption features						466		-		-		466
Equity
	U.S. Cellular shareholders' equity
		Series A Common and Common Shares
			Par Value ($1 per share) ($33,006 Series A Common and $55,068 Common Shares)			88,074		-		-		88,074
		Additional paid-in capital				1,417,308		-		-		1,417,308
		Treasury shares, at cost, 4,383 Common Shares				(183,385)		-		-		(183,385)
		Retained earnings				2,403,325		(154,250)		(23,762)		2,581,337
			Total U.S. Cellular shareholders' equity			3,725,322		(154,250)		(23,762)		3,903,334
	Noncontrolling interests (8)					64,818		-		43,771		21,047
				Total equity		3,790,140		(154,250)		20,009		3,924,381
Total liabilities and equity					$	6,523,635	$	(266,407)	$	30,856	$	6,759,186

(1)The “Divestiture Markets” column reflects amounts included in the “As Reported” column that are directly attributable to the transaction, are factually supportable and are expected to have a continuing impact on the consolidated results.

(2)The “NY1 & NY2” column reflects amounts included in the “As Reported” column that are directly attributable to the Deconsolidation, are factually supportable and are expected to have a continuing impact on the consolidated results as a result of the Deconsolidation.  NY1 & NY2 Equity in earnings of unconsolidated entities represents U.S. Cellular’s share of NY1 & NY2 net income for the period based on U.S. Cellular's interests in the Partnerships.

(3)The income tax expense (benefit) is based on U.S. Cellular’s statutory tax rate applied to the cumulative effect of changes within the Divestiture Markets.

5

(4)The number of basic and diluted shares outstanding did not change as a result of the Divestiture Transaction or the Deconsolidation.

(5)Reflects the receipt of cash of approximately $480 million from Sprint.  As a result of the sale of assets and liabilities to Sprint, U.S. Cellular will recognize a gain of approximately $154 million, net of income tax expense of approximately $112 million.  This has not been included as a pro forma adjustment to the unaudited pro forma Statements of Operations due to its non-recurring nature but has been recorded in the unaudited pro forma Balance Sheet as of March 31, 2013.  The following table provides a reconciliation of the Retained Earnings impact resulting from the Divestiture Transaction:

(Dollars in thousands)
Divestiture Markets Retained Earnings Reconciliation
	Cash proceeds		$	480,000
	Change in assets and liabilities, net (7)			(213,593)
	Current and deferred tax effect			(112,157)
		Gain, net of tax	$	154,250

Sprint will be required to reimburse U.S. Cellular up to $200 million for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees (the “Sprint Cost Reimbursement”).  The receipt of the Sprint Cost Reimbursement amounts will be recorded in (Gain) loss on sale of business and other exit costs, net. Such gains recorded as a result of the Sprint Cost Reimbursement will be partially offset by related decommissioning costs that are incurred, as costs that are not already accrued as a component of the liability for asset retirement obligations will also be recorded in (Gain) loss on sale of business and other exit costs, net.  The Sprint Cost Reimbursement has not been reflected in the unaudited pro forma Statements of Operations or Balance Sheet because these amounts will not be received until U.S. Cellular incurs the related costs after the closing of the Divestiture Transaction.

(6)As a result of the Deconsolidation, NY1 & NY2 assets and liabilities previously reflected in “As Reported” amounts are removed.  In addition, in accordance with GAAP, as a result of the Deconsolidation, U.S. Cellular’s interest in the Partnerships is reflected in Investments in unconsolidated entities at fair value as of April 3, 2013. The fair value of U.S. Cellular’s interest in the Partnerships is estimated to be in the range of $112 million to $128 million.  U.S. Cellular therefore expects to recognize a non-cash pre-tax gain in the range of $16 million to $32 million. For purposes of the unaudited pro forma financial information contained herein, U.S. Cellular assumed a fair value of approximately $120 million, which generated a non-cash pre-tax gain of approximately $24 million. This gain has not been included as a pro forma adjustment to the unaudited pro forma Statements of Operations due to its non-recurring nature but has been recorded in the unaudited pro forma Balance Sheet as of March 31, 2013.Recording U.S. Cellular’s interest in the Partnerships requires various assumptions, including allocation of the excess of fair value over book value to the assets and liabilities of the Partnerships.  Due to the incomplete fair value allocation primarily related to FCC licenses, customer lists and goodwill and the related useful lives, Equity in earnings of unconsolidated entities does not reflect adjustments related to depreciation or amortization of definite-lived tangible or intangible assets.  The actual results reported by U.S. Cellular in periods following the Deconsolidation may differ significantly from those reflected in the pro forma financial information contained herein.  The following table provides a reconciliation of the Retained Earnings impact resulting from the Deconsolidation:

(Dollars in thousands)
NY1 & NY2 Retained Earnings Reconciliation
	Estimated Fair Value of NY1 & NY2		$	120,000
	Existing investment balance			(62,524)
	Existing goodwill related to NY1 & NY2			(33,714)
		Gain	$	23,762

(7)At March 31, 2013, the following assets and liabilities were classified in U.S. Cellular’s Consolidated Balance Sheet as “Assets held for sale” and “Liabilities held for sale” as a result of the Divestiture Transaction:

(Dollars in thousands)
Assets held for sale
	Licenses		$	140,599
	Goodwill			72,994
		Total	$	213,593
Liabilities held for sale
	Customer deposits and deferred revenues		$	18,360

6

Amounts recorded as Liabilities held for sale will transfer to Sprint upon the closing of the transaction.  Per the Purchase and Sale Agreement with Sprint, the amount of the liabilities transferred to Sprint will be offset against future amounts owed to U.S. Cellular by Sprint under certain other agreements in connection with the Divestiture Transaction.  Therefore, Other current liabilities of $18,360 were recorded in the Consolidated Balance Sheet to reflect this obligation.

(8)As a result of the Deconsolidation, U.S. Cellular’s investment balances in NY1 and NY2 will be recorded as Investments in unconsolidated entities, thereby eliminating the noncontrolling interest portion previously recorded when NY1 and NY2 were consolidated.

7

EX-99.3

 

Exhibit 99.3

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

SAFE HARBOR CAUTIONARY STATEMENT

This Form 8-K contains statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.  All statements, other than statements of historical facts, that address activities, events or developments that U.S. Cellular intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements.  The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. Such forward‑looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward‑looking statements.  Such risks, uncertainties and other factors include those set forth below, as more fully discussed under “Risk Factors” in the most recent filing of U.S. Cellular’s Form 10-K, as updated by any U.S. Cellular Form 10-Q filed subsequent to such Form 10-K.  However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document.  Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements.  U.S. Cellular undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.   You should carefully consider the Risk Factors in the most recent filing of U.S. Cellular’s Form 10-K, as updated by any U.S. Cellular Form 10-Q filed subsequent to such Form 10-K, the following factors and other information contained in, or incorporated by reference into, this Form 8-K to understand the material risks relating to U.S. Cellular’s business.

·Intense competition in the markets in which U.S. Cellular operates could adversely affect U.S. Cellular’s revenues or increase its costs to compete.

·A failure by U.S. Cellular to successfully execute its business strategy (including planned acquisitions, divestitures and exchanges) or allocate resources or capital could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·A failure by U.S. Cellular’s service offerings to meet customer expectations could limit U.S. Cellular’s ability to attract and retain customers and could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·U.S. Cellular’s system infrastructure may not be capable of supporting changes in technologies and services expected by customers, which could result in lost customers and revenues.

·An inability to obtain or maintain roaming arrangements with other carriers on terms that are acceptable to U.S. Cellular could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·U.S. Cellular currently receives a significant amount of roaming revenues.  Further consolidation within the wireless industry, continued network build-outs by other wireless carriers and/or the inability to negotiate 4G LTE roaming agreements with other operators could cause roaming revenues to decline from current levels, which would have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·A failure by U.S. Cellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·To the extent conducted by the Federal Communications Commission (“FCC”), U.S. Cellular is likely to participate in FCC auctions of additional spectrum in the future as an applicant or as a noncontrolling partner in another auction applicant and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on U.S. Cellular.

·Changes in the regulatory environment or a failure by U.S. Cellular to timely or fully comply with any applicable regulatory requirements could adversely affect U.S. Cellular’s business, financial condition or results of operations.

·Changes in Universal Service Fund (“USF”) funding and/or intercarrier compensation could have an adverse impact on U.S. Cellular’s business, financial condition or results of operations.

·An inability to attract and/or retain highly competent management, technical, sales and other personnel could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

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·U.S. Cellular’s assets are concentrated in the U.S. wireless telecommunications industry. As a result, its results of operations may fluctuate based on factors related primarily to conditions in this industry.

·U.S. Cellular's lower scale relative to larger competitors could adversely affect its business, financial condition or results of operations.

·Changes in various business factors could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Advances or changes in technology could render certain technologies used by U.S. Cellular obsolete, could put U.S. Cellular at a competitive disadvantage, could reduce U.S. Cellular’s revenues or could increase its costs of doing business.

·Complexities associated with deploying new technologies present substantial risk.

·U.S. Cellular is subject to numerous surcharges and fees from federal, state and local governments, and the applicability and the amount of these fees are subject to great uncertainty.

·Changes in U.S. Cellular’s enterprise value, changes in the market supply or demand for wireless licenses, adverse developments in the business or the industry in which U.S. Cellular is involved and/or other factors could require U.S. Cellular to recognize impairments in the carrying value of its license costs, goodwill and/or physical assets.

·Costs, integration problems or other factors associated with acquisitions/divestitures of properties or licenses and/or expansion of U.S. Cellular’s business could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·A significant portion of U.S. Cellular’s revenues is derived from customers who buy services through independent agents who market U.S. Cellular’s services on a commission basis. If U.S. Cellular’s relationships with these agents are seriously harmed, its business, financial condition or results of operations could be adversely affected.

·U.S. Cellular’s investments in technologies which are unproven may not produce the benefits that U.S. Cellular expects.

·A failure by U.S. Cellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network and support systems could have an adverse effect on its operations.

·Financial difficulties (including bankruptcy proceedings) or other operational difficulties of any of U.S. Cellular’s key suppliers, termination or impairment of U.S. Cellular’s relationships with such suppliers, or a failure by U.S. Cellular to manage its supply chain effectively could result in delays or termination of U.S. Cellular’s receipt of required equipment or services, or could result in excess quantities of required equipment or services, any of which could adversely affect U.S. Cellular’s business, financial condition or results of operations.

·U.S. Cellular has significant investments in entities that it does not control.  Losses in the value of such investments could have an adverse effect on U.S. Cellular’s financial condition or results of operations.

·A failure by U.S. Cellular to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, including breaches of network or information technology security, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Wars, conflicts, hostilities and/or terrorist attacks or equipment failures, power outages, natural disasters or other events could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·The market price of U.S. Cellular’s Common Shares is subject to fluctuations due to a variety of factors.

·Identification of errors in financial information or disclosures could require amendments to or restatements of financial information or disclosures included in this or prior filings with the Securities and Exchange Commission (“SEC”). Such amendments or restatements and related matters, including resulting delays in filing periodic reports with the SEC, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·The existence of material weaknesses in the effectiveness of internal control over financial reporting could result in inaccurate

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financial statements or other disclosures or failure to prevent fraud, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Changes in facts or circumstances, including new or additional information that affects the calculation of potential liabilities for contingent obligations under guarantees, indemnities, claims, litigation or otherwise, could require U.S. Cellular to record charges in excess of amounts accrued in the financial statements, if any, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events, could, among other things, impede U.S. Cellular’s access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Uncertainty of U.S. Cellular's ability to access capital, deterioration in the capital markets, other changes in market conditions, changes in U.S. Cellular’s credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to U.S. Cellular, which could require U.S. Cellular to reduce its construction, development or acquisition programs.

·Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent U.S. Cellular from using necessary technology to provide products or services or subject U.S. Cellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·There are potential conflicts of interests between TDS and U.S. Cellular.

·Certain matters, such as control by TDS and provisions in the U.S. Cellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of U.S. Cellular.

·Any of the foregoing events or other events could cause revenues, earnings, capital expenditures and/or any other financial or statistical information to vary from U.S. Cellular’s forward-looking estimates by a material amount.

U.S. Cellular undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.  Readers should evaluate any statements in light of these important factors.

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